Social CRM for Retail – Threats and Solutions

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Brick-and-mortar retail businesses face a combination of ever-increasing customer expectations, customers being “educated” to expect and receive promotions, and of course an ever increasing competition in the market place for their customers’ share of mind and share of wallet. On top of all this they need to realize that they do not control the communication to their customers anymore, let alone being capable of controlling the communication in between their customers. As many bloggers, including myself, and analysts already stated, the advent of extremely user friendly and ubiquitous mobile devices and web applications essentially decoupled retailers from communications between their customers and even led to their marketing messages becoming part of the “background noise” for lots of consumers – just something one filters out when it comes to getting serious information.

Of course there are exceptions, especially considering that retail businesses reacted to this threat.

For retailers it is about being where the customers are. This started with setting up transactional web sites (web shops) to drive additional sales, using more and different ways to address customers, e.g. setting up and participating in communities, building fan pages on Facebook, Twitter streams, keeping in touch with exciting new services like Groupon, building capabilities to monitor and participate in discussions in forums, creating loyalty programs, and so on.

Quite some of the challenges facing retailers have the potential of being disruptive to their business models. Take Groupon as an example: Groupon is the successful implementation of a scheme that shifts the power balance drastically to the buyer (consumer) side; the scheme is similar to the earlier development of retailer purchase organizations that intended to counter the power of their suppliers (e.g. the expert group). Another example is yourbus, a German startup company that organizes long distance bus services, if the demand is high enough. Yourbus has the potential to really hurt the German railway.

Another main challenge is that fending off possibly disruptive attacks and staying in the minds of customers is a costly exercise – and retailers often run on slim margins. This means that activities need to be organized and efficient while making sure that the customer experience is consistent across all channels or touch points, like radio, TV, store, point of sale, web site, general marketing collateral, and, yes, of course, Facebook, blog sites, Twitter, and so on and so forth. The key word here is consistent; the experience does not need to be the same, actually cannot be the same; just imagine the differences between radio and TV, or between Facebook and Twitter. The current buzzword for achieving and maintaining this consistency is customer experience management.

There are a lot of good approaches towards keeping in the minds of customers. There are interesting reactions to Groupon, e.g. Wal-Mart’s CrowdSaver on Facebook or Uniqlo’s Lucky Counter that does the same via tweets on Twitter – offering a discount if enough positive voices are there. Social commerce and F-Commerce (e-commerce via Facebook) are definitely on the current hip list. The need to integrate topics like CRM, loyalty, mobile, e-commerce is definitely there.

What currently inhibits retailers (and other companies) from more effectively pursuing this necessary integration is lacking integration into back end systems. Gartner identified more than 100 vendors with Social CRM offerings in their first Magic Quadrant on Social CRM that dates June 2010. In the same research they assessed that only in 2011 social CRM suites will emerge, which then will be rapidly evolving.

I do not say that there is nothing out there – that would not be true. Salesforce.com, Oracle, SAP, Microsoft, Sage, RightNow technologies and Netsuite, also SugarCRM, they all have some or the other functionality, but there is no real breadth yet. Of course this list of vendors is not complete.

Let us focus in on SAP as an example. I do not single out SAP here; it is just that I know SAP a little more. SAP has all the necessary technologies, including an engine that is capable of measuring sentiments and StreamWork, a highly interesting tool. But neither SAP nor its partners do have a compelling integrated social CRM solution yet. There is SAP consulting themselves with their Social Media Cockpit, which effectively does some integration of CRM and Twitter as a marketing and service support tool. SAP consulting, too, has an add-on to CRM that extends loyalty management to Facebook. Then there is movento who have a Social CRM add-on that provides information about business partners from online communities directly in CRM. And CIBER is one of few companies bringing an integrated solution to organizations managing consumer marketing across multiple websites, having more a process than a product view.

So, what are avid retailers doing in these times? The market even now offers tools and technologies to support most important business processes that involve the social web, from (community) platforms via monitoring and listening tools, towards more business process orientated tools that support marketing, sales and service processes.

Today retailers pick and choose the tools that best support their social CRM strategies. They implement them as spot solutions, in silos, and increasingly also with custom integration into business systems.

Tomorrow we will see that they also have the option to choose pre-integrated software.

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